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Euro climbs to June highs as US Treasury buybacks boost Treasuries

EUR/USD was up 0.68% to around 1.1653 as the Treasury said it will at least double longer-dated buyback liquidity support, with the 30-year yield falling about 9 basis points.

Reported · Written up by our desk · Major Pairs

EUR/USD rose sharply on Wednesday, reaching its highest level since June as the US Dollar faced renewed selling pressure. FXStreet attributed the move to the US Treasury announcement that it will increase buybacks of longer-dated government debt.

The Treasury said it will at least double the size of its liquidity-support buyback operations for longer-dated nominal coupon securities, covering the 10-year to 20-year and 20-year to 30-year segments. FXStreet reported that the maximum size of each operation will increase from $2 billion to at least $4 billion.

Following the announcement, long-term Treasury yields fell as bond prices rose, with the 30-year Treasury yield dropping about 9 basis points to near 5.20%, after trading above 5.30% on Tuesday. The US Dollar Index, which tracks the greenback against six major currencies, was down 0.65% near 99 and at its lowest level since June 1.

FXStreet also linked the dollar weakness to expectations that the Federal Reserve is less likely to raise rates after softer US economic data. Attention then shifted to the FOMC July meeting minutes, while markets continued to expect the European Central Bank to raise interest rates in September amid energy-driven inflation concerns, according to FXStreet.

Latest closeEUR/USD 1.157 ▲0.4%|Dollar index 99.64 ▼0.3%

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